What is the required reserve ratio

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Reference no: EM131103651

Assets Liabilities

Total reserves: ________ Deposits: $500,000

Required reserves: $20,000

Excess reserves: $80,000

Loans: $ 400,000

Total Assets: $500,000 Total liabilities $500,000

a. What is the required reserve ratio? Show your calculation

- required reserve ratio= required services/ total reserves= $20,000/$100,00= .02

if the fed increases the reserve requirement from your answer to part a to 10 percent, explain verbally and show numerically what will happen to:

a- required services

b- excess reserves

c-the size of the simple money multiplier

d- the money supply in the economy

Reference no: EM131103651

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